Week 3 - Near External Environment

Question 1

Why do marketers conduct industry and market analysis and list the 3 tools used to help assist them

Answer 1

In the process of analysis, marketers aim to forecast market sizing and the future attractiveness of these markets they plan to expand into.

The 3 tools are
1. Porters 5 Forces - Access competitive dynamics in a market
2. Strategic Groups - What are the pre-existing customer groups that competitors have already formed around
3. PLC - forecasting the life of the market

Question 2

Describe Porters 5 forces and how it’s elements affect market attractiveness

Answer 2

1. Rivalry
   Attractiveness is HIGH when rivalry is LOW
   - No. of competitors is LOW
   - Few large firms dominate the market
2. Threat of New Entrants
   Market attractiveness is high when entry barriers are HIGH
   - Cost of entry high
   - Distribution channels are closed
3. Threat of Substitutes
   Market Attractiveness is HIGH when buyers are switching to substitutes is LOW
   - Tech is still relevant
   - Price of substitues is HIGH
4. Supplier Power
   Market attractiveness is HIGH when supplier power is LOW
   - Suppliers less than buyers
   - Cost of switching supplier s is LOW
5. Market Attractiveness is HIGH when supplier power is LOW
   - More buyers than sellers
   Buyer cost to switch is high

Question 3

Describe Strategic Groups and how it helps organisations conduct a market analysis

Answer 3

Strategic groups are firms and brands within an industry following similar strategies and targeting similar customer groups
- These strategic groups are separated by barriers of mobility
- Factors which prevent them from moving from one group to another

Question 4

Describe product life cycle and how it helps organisations conduct a market analysis

Answer 4

PLCs although is a strategy, have it’s assumptions
- All industries/products have a limited life
- Each cycle follows a predictable phase

Tracked on an X axis (Time) and Y axis (Profit)
1. Growth
2. Comp Turbulence
3,. Maturity
4. Decline

Question 5

Describe why marketers should conduct a competitor analysis and the 2 steps to do so.

Answer 5

Marketers conduct competitor analysis to understand rivals’ strengths and weaknesses, identify opportunities and threats, and develop strategies to gain a competitive advantage in the market.

1. Identify WHO the key competitors are
   - List 3-5 Competitors based on (top market shareholders and ones with strategic implications to your company)
2. Identify WHAT they are up to

OSRF Framework

Objectives
- What are they trying to achieve
- why are they trying to achieve it

Strategy
- What target markets are they pursuing
- What is their strategic focus

Resources
- Marketing assets and capabilities
- Production and operational capabilities

Future Strategy (It all leads up to this)
- How will they react to our actions
- What are some under utilised resources

Question 6

Why do marketer conduct consumer analysis and list the 6 step framework do it effectively.

Answer 6

Marketers conduct consumer analysis to understand customer needs, preferences, and behaviours, enabling them to create targeted and effective marketing strategies.

1. WHO is the customer
   - Who is involved in the buying process
   - How can you categorise these people
2. WHAT are their choice criteria
   - What criteria they use when they choose from competing brands
   - The functional/emotional benefits
3. WHEN customer buys
   - What is their purchase cycle
   - How frequently do they buy
4. WHERE Customer Buys
   - What are the outlets for buying
   - Where in the store
5. HOW Customer buys
   - What influence their decision to buy
   - What ways do they sue the product
6. WHY Customer buys
   - What do they expect from the product category
   - What needs and wants do they have